1. The stock market always goes up in the long run.

2. Efficient Market Theory states that:

The market is so efficient that everything that can be known about a company is constantly figured into the price of its stock - so that price is equal to the value of the company at all times.

The market is so efficient that once new information about a company is public, there is a small window of time to buy or sell befor this information is reflected in a sharp rise or plunge in the stock.

Institutional investors control such a large portion of the money in the market, that anything they do efficiently moves a stock in one direction or the other while any action smaller investors take makes little impact.

3. The average compound annual growth rate of the stock market, since 1900, is: (select one)

7%

8-12%

17-20%

4. Those few people who beat the market in the long run only do so because they have either studied hard or have above-average IQs:

True

False

5. The best way to make a lot of money on a stock involves: (select all that apply)

Monitoring the stock price carefully and investing just as it starts to rise sharply

Finding a business that has meaning to you and that you believe in

Researching the business carefully and reviewing several financial numbers to determine how it protects itself from competition in the same space

Following industry trends carefully and reading analysts' reports on that stock

Calculating what the business is worth and buying it well below that price

6. Real estate can always outperform the market and should be a part of everyone's portfolio:

True

False

7. It doesn't matter what price a stock is selling at; what matters is that it is being managed well and that customers are buying its product or service:

True

False

8. Hiring a financial professional is not important to your financial future because anyone, with the right training, can manage their money on their own:

True

False

9. The average American needs WHAT amount of money at retirement to uphold a comfortable lifestyle? (select one)

$500,000

$1 million

$3 million

10. When ready to retire, it's best to take out the money you will need all at once to avoid being taxed on each sale, instead of taking out what you need on a monthly basis:

True

False

11. Risk and reward in the stock market are related. If you want a higher return then you must be willing to take more risks:

True

False

12. The best way to offset the risk of investing in the stock market is to diversify across a large number of stocks:

True

False

13. You should sell a stock when:

The price rises higher than its value

A competitor's stock price surpasses it

Right after earnings reports have been released, and it has been announced that the company failed to achieve their sales projections.

14. A broad market mutual fund is the best choice for a low-risk retirement account like a 401(k) or an IRA:

True

False

15. Almost no one beats the market in the long run:

True

False

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